| 47 | | - | SECTION 1. The legislature finds that the State has a housing crisis and although general excise tax exemptions and county subsidies help to reduce development costs, private development of rental housing for households earning from sixty per cent up to one hundred forty per cent of the area median income is not financially feasible without additional public subsidy. The legislature further finds that although funding is appropriated annually to the rental housing revolving fund to finance projects serving households earning up to one hundred forty per cent of area median income, the funds are prioritized for federal and state low-income housing tax credit financed projects, which generally only serve households earning up to sixty per cent of the area median income. Because the demand for revolving fund financing from first-priority tax credit projects far exceeds funding availability, mixed-income projects, including those with units serving households earning up to one hundred forty per cent of the area median income, are not able to utilize the rental housing revolving fund. The legislature also finds that strategies are needed to help keep local residents in the State. Having affordable rental housing opportunities for working families reduces net domestic outmigration and preserves critical segments of the State's labor force. Accordingly, the purpose of this Act is to provide a dedicated source of funds to finance mixed-income rental housing projects by: (1) Establishing the mixed-income subaccount within the rental housing revolving fund to target workforce rental housing projects for persons and families with incomes at or below one hundred forty per cent of the area median income; (2) Authorizing the director of finance to transfer funds from the rental housing revolving fund into the mixed-income subaccount; and (3) Appropriating funds into and out of the mixed-income subaccount of the rental housing revolving fund. SECTION 2. Section 201H-202, Hawaii Revised Statutes, is amended to read as follows: "§201H-202 Rental housing revolving fund. (a) There is established the rental housing revolving fund to be administered by the corporation. (b) An amount from the fund, to be set by the corporation and authorized by the legislature, may be used for administrative expenses incurred by the corporation in administering the corporation's housing finance programs; provided that fund moneys shall not be used to finance day-to-day administrative expenses of projects allotted fund moneys. (c) The following may be deposited into the fund[:] or into the mixed-income subaccount established under subsection (f): appropriations made by the legislature, conveyance taxes pursuant to section 247-7, private contributions, repayment of loans, interest, other returns, and moneys from other sources. (d) The fund shall be used to provide loans for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of rental housing units. The corporation shall not forgive any loan made from the fund unless the corporation forecloses on the project. Permitted uses of the fund may include but are not limited to planning, design, land acquisition, costs of options, agreements of sale, downpayments, equity financing, capacity building of nonprofit housing developers, credit enhancement, gap financing, or other housing development services or activities as provided in rules adopted by the corporation pursuant to chapter 91. The rules may provide for a means of recapturing loans or grants made from the fund if a rental housing project financed under the fund is refinanced or sold at a later date. The rules may also provide that moneys from the fund shall be leveraged with other financial resources to the extent possible. (e) [Moneys] Except as provided in subsection (f), moneys available in the fund shall be used for the purpose of providing, in whole or in part, loans for rental housing projects demonstrating project readiness, efficiency, and feasibility acceptable to the corporation in the following order of priority: [(1) For projects that were awarded low-income housing credits pursuant to paragraph (2), priority shall be given to projects with a perpetual affordability commitment; (2)] (1) Projects or units in projects that are allocated low-income housing credits pursuant to the state housing credit ceiling under section 42(h) of the Internal Revenue Code of 1986, as amended, or projects or units in projects that are funded by programs of the United States Department of Housing and Urban Development and United States Department of Agriculture Rural Development wherein: (A) At least fifty per cent of the available units are for persons and families with incomes at or below eighty per cent of the median family income of which at least five per cent of the available units are for persons and families with incomes at or below thirty per cent of the median family income; and (B) The remaining units are for persons and families with incomes at or below one hundred per cent of the median family income; provided that the corporation may establish rules to ensure full occupancy of fund projects; provided that for projects that were awarded low-income housing credits pursuant to this paragraph, priority shall be given to projects with a perpetual affordability commitment. For purposes of this paragraph, "perpetual" means the life of the project; and [(3)] (2) Mixed-income rental projects or units in a mixed-income rental project [wherein all of the available units are] for persons and families with incomes at or below one hundred forty per cent of the median family income. (f) There is established within the fund a mixed-income subaccount. Moneys in the mixed-income subaccount shall be used to make loans to mixed-income rental projects or units in a mixed-income rental project for persons and families with incomes at or below one hundred forty per cent of the area median income. The corporation shall establish an application process for the allocation of funds in the mixed-income subaccount, separate from the fund allocation process pursuant to section 201H-204(c), that gives preference to projects meeting the following criteria that are listed in descending order of priority: (1) A diverse range of affordability, targeting persons and families with incomes up to one hundred forty per cent of the median family income; (2) Projects located on state or county owned land; (3) Projects for which a loan from the subaccount is reasonably projected to be fully repaid within forty years from funding; and (4) Any other criteria as the corporation deems necessary to carry out the purposes of this subsection. If the corporation, after applying the process described in this subsection, finds a nonprofit project equally ranked with a for-profit or government project, the corporation shall give preference to the nonprofit project in allotting funds from the mixed-income subaccount. Moneys derived from the repayment of loans funded by the mixed-income subaccount, interest thereon, and related fees and returns shall be deposited into the mixed-income subaccount. [(f)] (g) There is established within the fund a bond volume cap recycling program subaccount. The bond volume cap recycling program subaccount shall be maintained as a reserve for the bond volume cap recycling program established pursuant to section 39B-2(f). [(g)] (h) The corporation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session describing the projects funded and, with respect to rental housing projects targeted for persons and families with incomes at or below thirty per cent of the median family income, its efforts to develop those rental housing projects, a description of proposals submitted for this target group and action taken on the proposals, and any barriers to developing housing units for this target group. [(h)] (i) For the purposes of this subpart, the applicable median family income shall be the median family income for the county or standard metropolitan statistical area in which the project is located as determined by the United States Department of Housing and Urban Development, as adjusted from time to time. [(i)] (j) The corporation may provide loans under this section; provided that the corporation shall establish loan-to-value ratios to protect the fund from inordinate risk and that under no circumstances shall the rules permit the loan-to-value ratio to exceed one hundred per cent; provided further that the underwriting guidelines include a debt-coverage ratio of no less than 1.0 to 1. [(j)] (k) For the period commencing July 1, 2005, through June 30, 2009, the fund may be used to provide grants for rental units set aside for persons and families with incomes at or below thirty per cent of the median family income in any project financed in whole or in part by the fund in proportion of those units to the total number of units in the project. At the conclusion of the period described in this subsection, the corporation shall report to the legislature on the number and use of grants provided and whether the grants were an effective use of the funds for purposes of developing rental housing for families at or below thirty per cent of the median family income." SECTION 3. Section 201H-204, Hawaii Revised Statutes, is amended to read as follows: "[[]§201H-204[]] Eligible projects. (a) Activities eligible for assistance from the fund shall include but not be limited to: (1) New construction, rehabilitation, or preservation of low-income or mixed-income rental housing units that meet the criteria for eligibility described in subsection (c)[;] or section 201H-202(f); (2) The leveraging of moneys with the use of fund assets; (3) Pre-development activity grants or loans to nonprofit organizations; and (4) Acquisition of housing units for the purpose of preservation as low-income or very low-income housing. (b) Preference shall be given to projects producing units in at least one of the following categories: (1) Multifamily units; (2) Attached single-family units; (3) Apartments; (4) Townhouses; (5) Housing units above commercial or industrial space; (6) Single room occupancy units; (7) Accessory apartment units; (8) Employee housing; (9) United States Department of Housing and Urban Development mixed finance development of public housing units; and (10) Other types of units meeting the criteria for eligibility set forth in subsection (c)[.] or section 201H-202(f). (c) [The] Except as provided in section 201H-202(f), the corporation shall establish an application process for fund allocation that gives preference to projects meeting the following criteria that are listed in descending order of priority: (1) Serve the original target group; (2) Provide at least five per cent of the total number of units for persons and families with incomes at or below thirty per cent of the median family income; (3) Provide the maximum number of units for persons or families with incomes at or below eighty per cent of the median family income; (4) Are committed to serving the target group over a longer period of time; (5) Increase the integration of income levels of the immediate community area; (6) Meet the geographic needs of the target group of the proposed rental housing project, such as proximity to employment centers and services; and (7) Have favorable past performance in developing, owning, managing, or maintaining affordable rental housing. The corporation may include other criteria as it deems necessary to carry out the purposes of this subpart. If the corporation, after applying the process described in this subsection, finds a nonprofit project equally ranked with a for-profit or government project, the corporation shall give preference to the nonprofit project in allotting fund moneys." SECTION 4. Section 247-7, Hawaii Revised Statutes, is amended to read as follows: "§247-7 Disposition of taxes. All taxes collected under this chapter shall be paid into the state treasury to the credit of the general fund of the State, to be used and expended for the purposes for which the general fund was created and exists by law; provided that of the taxes collected each fiscal year: (1) Ten per cent or $5,100,000, whichever is less, shall be paid into the land conservation fund established pursuant to section 173A-5; and (2) Fifty per cent or $38,000,000, whichever is less, shall be paid into the rental housing revolving fund established by section 201H-202[.]; provided that funds allocated under this paragraph may be transferred into the mixed-income subaccount established pursuant to section 201H-202(f)." SECTION 5. The director of finance may transfer moneys from the rental housing revolving fund to the rental housing revolving fund mixed-income subaccount in an amount not to exceed $ for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027. SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the mixed-income subaccount of the rental housing revolving fund established pursuant to section 201H-202(f), Hawaii Revised Statutes. SECTION 7. There is appropriated out of the mixed-income subaccount of the rental housing revolving fund established pursuant to section 201H-202(f), Hawaii Revised Statutes, the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the purposes of the subaccount. The sums appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act. SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 9. This Act shall take effect on July 1, 3000. |
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| 47 | + | SECTION 1. The legislature finds that the State is experiencing an extreme housing shortage. However, the rental housing revolving fund, the State's primary means of financing new housing, produces new housing with extreme inefficiency. Presently, the rental housing revolving fund requires spending roughly $200,000 of state taxpayer funds per unit, typically to be repaid at only 0.15 per cent interest over fifty-seven years. Units financed by the rental housing revolving fund are typically only affordable for up to sixty-one years, which will result in the expiration of fifteen thousand units by the year 2100. The families in those fifteen thousand units will likely be evicted as rents rise to market rates unless the State and counties buy back the buildings, causing taxpayers to pay twice for the same building. As a result of these attractive terms, the rental housing revolving fund now finances half of all housing production statewide, crowding out all other forms of housing finance, including from the private sector. Furthermore, the rental housing revolving fund is overbuilding rental housing at the sixty per cent area median income level. According to the Hawaii housing finance and development corporation's 2019 Hawaii housing planning study, the corporation forecasts a demand of only 1,789 rental units for households earning fifty to sixty per cent of the area median income, or three hundred fifty-eight units per year, over the 2020 2025 period, which is almost exclusively what comprises low-income housing tax credit projects. Presently, the Hawaii housing finance and development corporation is financing well over one thousand low-income housing tax credit units per year. Due to the dramatic overbuilding of this narrow market segment, over thirty per cent of low-income housing tax credit units are being rented by tenants earning thirty per cent of the area median income, who are severely cost burdened as a result. The same 2019 study forecasts demand of 1,855 rental units, or three hundred seventy-one units per year, for renters earning one hundred twenty per cent to one hundred forty per cent of area median income over the same five-year period. By contrast, there is demand for 11,872 ownership units for households earning one hundred twenty per cent of the area median income or greater, which equals 2,156 units at one hundred twenty to one hundred forty per cent of area median income; 3,982 units at one hundred forty to one hundred eighty per cent of area median income; and 5,734 units greater than one hundred eighty per cent of area median income, over the same five-year period, or 2,374 units per year. These figures indicate that there is much greater demand than what the market is currently supplying. Therefore, prioritizing financing for tier I and tier II area median income segments, while enabling surplus funds to be used to produce housing in the most efficient means possible, will greatly increase housing production in the State. Accordingly, the purpose of this Act is to: (1) Rename the rental housing revolving fund to the state housing revolving fund; (2) Establish a tiered system for the prioritization of moneys awarded from the state housing revolving fund; (3) Require the Hawaii housing finance and development corporation to establish an application process for fund allocation; and (4) Require the Hawaii housing finance and development corporation to prioritize projects that require the least amount of funding per unit per year. SECTION 2. Chapter 201H, Hawaii Revised Statutes, is amended by amending the title of subpart J of part III to read as follows: "J. [Rental] State Housing Revolving Fund" SECTION 3. Section 201H-201, Hawaii Revised Statutes, is amended as follows: 1. By amending the definition of "fund" to read: ""Fund" means the [rental] state housing revolving fund established pursuant to section 201H-202." 2. By repealing the definitions of "efficiency", "feasibility", and "project readiness". [""Efficiency" means the amount of state financial resources required per unit. "Feasibility" means reasonableness of project budget and schedule assumptions. "Project readiness" means a project that is anticipated to commence construction within one year of award of financing."] SECTION 4. Section 201H-202, Hawaii Revised Statutes, is amended as follows: 1. By amending its title and subsection (a) to read: "§201H-202 [Rental] State housing revolving fund. (a) There is established the [rental] state housing revolving fund to be administered by the corporation." 2. By amending subsections (d) and (e) to read: "(d) The fund shall be used to provide loans for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of [rental] housing units. The corporation shall not forgive any loan made from the fund unless the corporation forecloses on the project. Permitted uses of the fund may include but are not limited to planning, design, land acquisition, costs of options, agreements of sale, downpayments, equity financing, capacity building of nonprofit housing developers, credit enhancement, gap financing, or other housing development services or activities as provided in rules adopted by the corporation pursuant to chapter 91. The rules may provide for a means of recapturing loans or grants made from the fund if a [rental] housing project financed under the fund is refinanced or sold at a later date. The rules may also provide that moneys from the fund shall be leveraged with other financial resources to the extent possible. (e) Moneys available in the fund shall be used for the purpose of providing, in whole or in part, loans for [rental] housing projects [demonstrating project readiness, efficiency, and feasibility acceptable to the corporation] in the following order of priority: (1) For projects that were awarded low-income housing credits pursuant to paragraph (2), priority shall be given to projects with a perpetual affordability commitment; (2) Projects or units in projects that are allocated low‑income housing credits pursuant to the state housing credit ceiling under section 42(h) of the Internal Revenue Code of 1986, as amended, or projects or units in projects that are funded by programs of the United States Department of Housing and Urban Development and United States Department of Agriculture Rural Development [wherein: (A) At least fifty per cent of the available units are for persons and families with incomes at or below eighty per cent of the median family income of which at least five per cent of the available units are for persons and families with incomes at or below thirty per cent of the median family income; and (B) The remaining units are for persons and families with incomes at or below one hundred per cent of the median family income; provided that the corporation may establish rules to ensure full occupancy of fund projects; and]; provided that paragraphs (1) and (2) shall apply to awards up to the annual number of rental units that the corporation's most recent Hawaii housing planning study forecasts are needed for persons and families with incomes at fifty to sixty per cent of the area median income; (3) Mixed-income [rental] projects or units in a mixed‑income [rental] project [wherein all of the available units are for persons and families with incomes at or below one hundred forty per cent of the median family income.]; provided that this paragraph shall apply to awards up to the annual number of rental units that the corporation's most recent Hawaii housing planning study forecasts are needed for persons and families with incomes at one hundred twenty to one hundred forty per cent of the area median income; and (4) Projects that are exclusively for qualified residents as defined in section 201H-32." 3. By amending subsection (g) to read: "(g) The corporation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session describing the projects funded and, with respect to [rental] housing projects targeted for persons and families with incomes at or below thirty per cent of the median family income, its efforts to develop those [rental] housing projects, a description of proposals submitted for this target group and action taken on the proposals, and any barriers to developing housing units for this target group." SECTION 5. Section 201H-204, Hawaii Revised Statutes, is amended to read as follows: "[[]§201H-204[]] Eligible projects. (a) Activities eligible for assistance from the fund shall include but not be limited to: (1) New construction, rehabilitation, or preservation of low-income rental housing units [that meet the criteria for eligibility described in subsection (c)]; (2) The leveraging of moneys with the use of fund assets; (3) Pre-development activity grants or loans to nonprofit organizations; and (4) Acquisition of housing units for the purpose of preservation as low-income or very low-income housing. (b) [Preference shall be given to projects producing units in at least one of the following categories: (1) Multifamily units; (2) Attached single-family units; (3) Apartments; (4) Townhouses; (5) Housing units above commercial or industrial space; (6) Single room occupancy units; (7) Accessory apartment units; (8) Employee housing; (9) United States Department of Housing and Urban Development mixed finance development of public housing units; and (10) Other types of units meeting the criteria for eligibility set forth in subsection (c).] The corporation shall establish an application process for fund allocation. Preference shall be given to projects meeting the following criteria: (1) Multifamily units near stations of a locally preferred alternative of a mass transit project; (2) State- or county-owned projects; (3) Projects that are required to be conveyed to the State or a county at a definite time; (4) Projects owned by organizations obliged to use all financial surplus generated by the projects to construct, manage, or rehabilitate owner- or renter‑occupied housing in the State; (5) Projects with a perpetual affordability commitment; (6) Projects of applicant developers who request loan terms no longer than five years; and (7) Projects requiring the least amount of state funding per unit per year. [(c) The corporation shall establish an application process for fund allocation that gives preference to projects meeting the following criteria that are listed in descending order of priority: (1) Serve the original target group; (2) Provide at least five per cent of the total number of units for persons and families with incomes at or below thirty per cent of the median family income; (3) Provide the maximum number of units for persons or families with incomes at or below eighty per cent of the median family income; (4) Are committed to serving the target group over a longer period of time; (5) Increase the integration of income levels of the immediate community area; (6) Meet the geographic needs of the target group of the proposed rental housing project, such as proximity to employment centers and services; and (7) Have favorable past performance in developing, owning, managing, or maintaining affordable rental housing. The corporation may include other criteria as it deems necessary to carry out the purposes of this subpart. If the corporation, after applying the process described in this subsection, finds a nonprofit project equally ranked with a for-profit or government project, the corporation shall give preference to the nonprofit project in allotting fund moneys.]" SECTION 6. Sections 201H-6(f), 201H-87, and 247-7, Hawaii Revised Statutes, are amended by substituting the term "state housing revolving fund", or similar term, wherever the term "rental housing revolving fund", or similar term, appears, as the context requires. SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 8. This Act shall take effect on July 1, 2050. |
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